Comment by dsnr
8 days ago
Not answering your question directly but accounting and taxes are a thing everywhere. EU rules make accounting for companies quite complicated.
Focus on your business, open the smallest and simplest entity you can to validate your product before spending time and money optimizing or scaling things. That being said, I’m familiar with GmbHs in Germany and I would advise against going this route unless funding is available. Try a sole proprietorship instead if possible.
"accounting and taxes are a thing everywhere. EU rules make accounting for companies quite complicated" >> this is the most wrong thing ever. You cannot compare the one click accounting in estonia with german kafkaesk absurdity designed to grind you down. How things are implemented are drastically different in countries even if both in the EU.
If you have a company in estonia but you reside and fully control it from Germany, you might be liable for taxation in Germany due to CFC laws.
Thank you! Yes, that's why I'm looking for a simpler and less bureaucratic alternative. I'm totally fine with general accounting and taxes. But I would be happy if there was an alternative somewhere where you don't have to go to a notary for every little change and don't necessarily need a tax advisor because you have to talk to five different tax offices. Germany really makes it more complicated than it needs to be.
edit: just stumbled upon this really good blog post about the topic, in case anyone is interested: https://eidel.io/posts/estonias-e-residency-is-awesome-and-s...
Haha, thanks for linking to my website! Happy to answer any questions.
Skimmed this thread and I'm quite surprised how few people are aware of the permanent establishment problem.
Quick primer on the permanent establishment problem: You would technically have to pay taxes for your company in the place you're living (not Estonia). For example, if you're living in Germany, your Estonian OÜ would technically have to file for German taxes, too, because it's being run from Germany and it now has a permanent establishment in Germany.
So, roughly speaking, the Estonian OÜ is only useful if:
- You are in a country which doesn't have a permanent establishment problem and maybe even offers tax benefits for foreign companies (e.g. the non-dom rules of Malta, Cyprus, etc.)
- You are in a country which doesn't have a permanent establishment problem because they don't crack down on foreign company ownership (e.g. most developing countries)
In all other countries, the Estonian OÜ is likely going to cause you many tax headaches in the long run. In practice, this means:
a) Your local tax authorities don't notice or don't understand, and you're still fine, even though you'd need to file for taxes;
b) Your local tax authorities crack down on you and you need to go looking for a very expensive international tax advisor versed in Estonian and your local tax law.
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